London, Jan 31 (Reuters): Fallout from Britain’s explosive Hutton report showed no sign of abating today as indignant BBC staff defended their ex-boss and there were renewed demands for a public inquiry into Tony Blair’s case for war in Iraq.

Dismayed by judge Lord Hutton’s strong censure of the BBC and near-total exoneration of the government over the suicide of Iraq weapons expert David Kelly, hundreds of BBC employees paid for a full-page newspaper ad to vent their feelings.

“Greg Dyke stood for brave, independent and rigorous BBC journalism that was fearless in its search for the truth,” they said of the BBC’s former director-general who resigned a day after the inquiry findings were published on Wednesday.

In a remarkable implosion at one of the world’s best-known media organisations, chairman of the BBC board of governors Gavyn Davies quit on Wednesday and the investigative reporter at the centre of the storm, Andrew Gilligan, resigned yesterday.

“We are resolute that the BBC should not step back from its determination to investigate the facts in pursuit of the truth,” said BBC staff, some of whom walked out in protest at offices across the country on Thursday.

Gilligan’s broadcast last year claimed the government “sexed up” the threat from Saddam Hussein in an intelligence dossier.

Government scientist Kelly, who was the anonymous source for Gilligan’s story, committed suicide when his name came out.

The BBC accepted Gilligan’s report had errors. But many were shocked by the severity of Hutton’s criticism of the BBC compared with the almost total lack of criticism of the government and officials.

Critics say the involvement of Blair officials in the outing of Kelly was papered over, while the underlying question of Blair’s case for war was ignored.

“If Lord Hutton had fairly considered the evidence he heard, he would have concluded that most of my story was right,” Gilligan said in his resignation statement. “The government did sex up the dossier, transforming possibilities and probabilities into certainties, removing vital caveats.”

“Some of my story was wrong... But the BBC collectively has been the victim of a grave injustice,” Gilligan added. Such suspicions are likely to dog Blair for some time.

Polls show the public pressure is still on. The latest from pollster YouGov said 44 per cent still thought Blair was not telling the truth when he denied authorising the leaking of Kelly’s name, versus 40 per cent who believed him.

Some 150 protesters braved rain and cold to gather outside Blair’s Downing Street office today. Waving placards saying: “Where are the WMDs'” and “Bliar”, they demanded an independent public inquiry into the government’s case for war.

“I believe this Iraq issue will dog Tony Blair to his political grave, to his actual grave and into history,” legislator George Galloway, expelled from the ruling Labour Party for his anti-Blair rhetoric, said.

Newspapers were full of criticism of the Hutton report.

“Hutton’s assault upon the whole culture of the BBC and journalism is out of all proportion to their offences,” former Daily Telegraph editor Max Hastings said in a commentary.

“It ignores the huge, ugly reality, that Tony Blair took Britain to war in Iraq on a fraudulent basis.”

Internal inquiry

The BBC is to launch an internal inquiry into what went wrong with Gilligan's story.

Mark Byford, the acting director-general, said the investigation into the handling of the “sexed up” dossier story would ensure the mistakes highlighted by Lord Hutton would not happen again and “rebuild trust in BBC news.”